Dutch banks are tightening rules on interest-only mortgages. Find out what is changing, why it matters, and how it affects your mortgage plans.
If you have been following Dutch mortgage news lately, you may have noticed a clear trend: banks are tightening the rules on interest-only mortgages. After one of the country's largest banks announced stricter conditions earlier this year, several other major lenders have now followed suit.
For anyone looking to buy a home in the Netherlands — or already paying off a mortgage — this is an important development. Let us explain what is changing, why it is happening, and what it means for your hypotheekadvies (mortgage advice) and financial planning.
Before we dive into the changes, let us quickly cover the basics. An aflossingsvrije hypotheek (interest-only mortgage) is a mortgage where you only pay interest during the loan term. You do not repay any of the principal. At the end of the term — usually 30 years — you still owe the full original amount you borrowed.
This type of mortgage used to be very popular in the Netherlands because it keeps your monthly payments low. However, it also means you build up no equity through repayment, and you face a large debt at the end of the term that somehow needs to be resolved.
For many years, interest-only mortgages offered attractive tax benefits. The interest payments were fully tax-deductible, which made them financially appealing. Combined with rising house prices, many homeowners assumed their property value would grow enough to cover the outstanding debt.
But times have changed. Tax rules have been updated, and financial regulators have raised serious concerns about the risks involved.
Multiple major Dutch lenders are now significantly reducing the maximum amount you can finance through an interest-only mortgage. Here is the key change you need to understand.
Going forward, the interest-only portion of a new mortgage at several major banks will be capped at a maximum of 30 percent of the property value. Until now, this limit was 50 percent at many lenders.
That is a significant reduction. If you are buying a home worth 400,000 euros, for example, you could previously finance up to 200,000 euros on an interest-only basis. Under the new rules, that drops to 120,000 euros. The remaining amount must be financed through a repayment mortgage — either annuity-based or linear.
This trend is not limited to a single bank. Multiple large banking groups and their subsidiaries have announced or implemented these changes. The expectation in the market is that more lenders will follow in the coming months, as financial regulators have been vocal about the risks of large interest-only mortgage portfolios.
No, and this is important. If you currently have an interest-only mortgage, your existing terms remain unchanged. The new restrictions only apply to new mortgage applications. However, if you refinance at the end of your current term or request an increase in your mortgage, the new conditions will apply at that point.
This is not a random decision. Dutch financial regulators have been warning about the risks of interest-only mortgages for years. The Netherlands has one of the highest household debt levels in Europe, and a significant portion of that debt is tied to mortgages where the principal is never repaid.
From a lender perspective, a large portfolio of interest-only mortgages represents concentrated risk. If property values decline, these borrowers could find themselves owing more than their home is worth — with no repayment buffer built up over the years.
For homeowners, the risk is perhaps even more personal. If you reach the end of a 30-year interest-only mortgage term without having saved or invested enough to repay the principal, you face a serious financial challenge. You may need to sell your home, refinance under potentially less favorable conditions, or find other means to settle the debt.
The stricter rules aim to ensure that new borrowers build up equity from the start, creating a healthier and more sustainable financial position over time.
If you are planning your eerste huis kopen (first home purchase) in the Netherlands, these changes will affect your options — but they are not necessarily bad news.
With a smaller interest-only component, your monthly mortgage payments will be higher than they would have been under the old rules. But here is the upside: you are actually paying off your mortgage. Every month, your remaining debt decreases, and your equity in the property grows.
Think of it this way: you are building wealth instead of just renting money from the bank.
The hypotheekregels Nederland (Dutch mortgage regulations) already determine how much you can borrow based on your income. With a larger repayment component in your mortgage, the bank needs to account for higher monthly payments. This could slightly reduce your maximum borrowing amount compared to a fully interest-only scenario.
This is where good hypotheekadvies becomes essential. An onafhankelijk hypotheekadviseur (independent mortgage advisor) can calculate exactly what different mortgage structures mean for your monthly costs and your maximum purchase price.
If you are an expat looking for a hypotheek voor expats (mortgage for expats), these changes add another layer of complexity to an already complicated process.
Not all lenders treat interest-only mortgages the same way, and not all lenders apply the same limits. Some may still offer slightly different conditions depending on your profile, income level, and the property you are buying.
As an expat, you may also be dealing with other challenges — the 30 percent ruling, foreign income documentation, or a temporary employment contract. Combining these factors with the new interest-only restrictions makes it even more important to work with an advisor who understands both the expat landscape and the latest mortgage market developments.
Choosing the right mortgage structure is not just about getting the lowest monthly payment. It is about finding a balance between affordability now and financial security in the future. An experienced advisor can help you compare annuity, linear, and partial interest-only structures to find the combination that works best for your situation.
If you already have an interest-only mortgage, the new rules do not change your current terms. But it is worth thinking about the future.
Many homeowners with interest-only mortgages will face a decision when their current term ends. At that point, refinancing will be subject to the new, stricter conditions. If you have not been building up savings or making voluntary repayments, this transition could be challenging.
Now is a good time to review your situation. How much do you still owe? What is your property worth? And what are your options for gradually transitioning to a repayment mortgage before the term expires?
Most mortgage contracts allow you to make voluntary annual repayments, typically up to 10 or 20 percent of the original mortgage amount. Taking advantage of this now can significantly reduce the debt you face at the end of your term and make a future refinancing much smoother.
Here is a summary of the key takeaways. Multiple major Dutch lenders are capping the interest-only portion of new mortgages at 30 percent of the property value, down from 50 percent. This change applies to new applications only and does not affect existing mortgages. The restrictions are driven by regulators concerned about financial stability and homeowner risk. For first-time buyers, this means higher monthly payments but stronger long-term financial health. For expats, the changes make expert mortgage guidance even more important. Current homeowners with interest-only mortgages should start planning ahead for end-of-term refinancing.
Changes in the mortgage market can feel unsettling, especially if you are in the middle of planning a home purchase. But these new restrictions are ultimately designed to protect you as a borrower.
The key is to understand how these changes affect your specific situation and to make informed decisions based on accurate, up-to-date advice.
At Financial Consultancy Holland, we stay on top of every development in the Dutch mortgage market. Whether you are a first-time buyer figuring out your eerste huis options, an expat navigating a complex financial picture, or a homeowner wondering what to do with your current interest-only mortgage, we are here to help.
Reach out to us for independent, personal hypotheekadvies tailored to your situation. We will walk you through your options, explain what the new rules mean for you, and help you find the mortgage structure that fits your life — today and in the future.
